Q1 2025 Pulmonx Corp Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to Palm and next first quarter 'twenty 25 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you would need.

Operator: Ladies and gentlemen, thank you for standing by and welcome to Pulmonx's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Operator: To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Press Star one on your telephone you will then hear an automated message advising your hand, just raise to withdraw your question. Please press star one again, please be advised that today's conference is being recorded.

Operator: Please be advised that today's conference is being recorded.

Lane Morgan: I would now like to turn the conference over to Lane Morgan, Investor Relations. Please go ahead.

Speaker Change: I would now like to turn the conference over to lean more again Investor Relations. Please go ahead.

Speaker Change: Good afternoon, and thank you for participating in today's call. Joining me from homeowners are Steve Williams, our President and Chief Executive Officer and ignore junkie.

Lane Morgan: Good afternoon, and thank you for participating in today's webinar.

Lane Morgan: Joining me from Pulmonx are Steve Williamson, President and Chief Executive Officer, and Mehul Joshi. financial officer.

Speaker Change: Financial Officer earlier today, <unk> issued a press release announcing its financial results for the quarter ended March 31 2025.

Lane Morgan: Earlier today, Pulmonx issued a press release announcing its financial results for the quarter ended March 31st, 2021. A copy of the press release is available on Pulmonx's website.

Speaker Change: A copy of the press release is available on commodities website before we begin I'd like to remind you that management will make statements. During the call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 90 to 95.

Lane Morgan: Before we begin, I'd like to remind you that management will make statements during the call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking. A forward-looking statement including, without limitation, those relating to our operating trends, commercial strategies, and future financial performance, the timing and results of clinical trials, physician engagement, expense management, market opportunity, guidance for revenue, gross margin, and operating Commercial Expansion and Product Demand, Adoption and Pipeline Development are based upon our current estimates and very.

Speaker Change: Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.

Speaker Change: All forward looking statements, including without limitation those relating to our operating trends commercial strategies and future financial performance the timing and results of clinical trials physician engagement expense management market opportunity guidance for revenue gross margin and operating expenses.

Speaker Change: Commercial expansion in product demand adoption and pipeline development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements for a list and description of the risks and uncertainties.

Lane Morgan: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these four labels. Accordingly, you should not place undue reliance For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our filings with the Securities and Exchange Commission, including our annual report on Form 10-K filed with SEC on February 25, 2021.

Speaker Change: Associated with our business. Please refer to the risk factors section of our filings with the Securities and Exchange Commission, including our annual report on Form 10-K filed with the SEC on February 23rd 2025.

Lane Morgan: Also during this call, we will discuss non-GAAP financial Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the which is posted on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for a GAAP.

Speaker Change: Also during this call we will discuss certain non-GAAP financial measures reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Lane Morgan: This conference call contains time-sensitive information and is accurate only as of the live broadcast today, April 30th, 2025. Pulmonx claims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise.

Speaker Change: This conference call contains time sensitive information and if I could.

Speaker Change: Only as of the live broadcast today April 32025, months' disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise and with that I'll turn the call over to Steve.

Lane Morgan: And with that, I'll turn the call over. Thanks, Lane.

Steve: Thanks, Lynn good afternoon, everyone and welcome to our first quarter 2025 earnings call here with me as May hold Joshi, our Chief Financial Officer, I Am pleased to report that <unk> delivered worldwide sales of $22 5 million in the first quarter of 2025, representing 20% growth over the same period last year and 21% on a constant currency.

Steven Williamson: Good afternoon, everyone, and welcome to our first quarter 2025 earnings call. Here with me is Mehul Joshi, our Chief Financial Officer. I am pleased to report that Pulmonx delivered worldwide sales of $22.5 million in the first quarter of 2025, representing 20% growth over the same period last year and 21% on a constant currency basis. We're encouraged by our team's continued execution of our commercial initiatives, and we remain confident in our ability to deliver on our previously communicated revenue guidance of $96 to $98 million for the full year 2025. Throughout the first quarter, we made steady progress executing our Acquire, Test, and Treat strategy, setting the stage for sustained growth and long-term success.

Steve: Basis, we're encouraged by our team's continued execution of our commercial initiatives and we remain confident in our ability to deliver on our previously communicated revenue guidance of $96 million to $98 million for the full year 2025.

Steve: Throughout the first quarter, we made steady progress executing our acquired test and treat strategy setting the stage for sustained growth and long term success. This strategy is focused on helping our customers more efficiently acquire the right patients test them for eligibility and ultimately treat more patients suffering from COPD. We expect the strong foundation we are built.

Steven Williamson: This strategy is focused on helping our customers more efficiently acquire the right patients, test them for eligibility, and ultimately treat more patients suffering from COPD. We expect the strong foundation we are building will help accelerate penetration into our estimated $12 billion market opportunity and support growth at or above 20% over the long term. As part of the first step of our strategy to acquire the right patients, we're increasing both clinician and patient awareness and engagement, while at the same time rolling out tools like Lung Tracts Detect to help our customers identify patients with severe emphysema who are already under their care.

Steve: <unk> will help accelerate penetration into our estimated $12 billion market opportunity and support growth at or above 20% over the long term.

Steve: As part of the first step of our strategy to acquire the right patients, we're increasing both clinician and patient awareness and engagement while at the same time rolling out tools like lung tracts protect to help our customers identify patients with severe emphysema, who are already under their care.

Steve: Our market research indicates that the vast majority of Pulmonologists are aware of endobronchial valves, but less than a third of refer to patient for evaluation or data indicate this is primarily related to a lack of familiarity with patient eligibility criteria.

Steven Williamson: Our market research indicates that the vast majority of pulmonologists are aware of endobronchial valves, but less than a third have referred a patient for evaluation. Our data indicate this is primarily related to a lack of familiarity with patient eligibility criteria. To address this gap in awareness, in Q1, we hosted over 40 peer-to-peer events, engaging and educating providers in the community who manage COPD patients about the selection criteria and benefits of Zephyr valves. In addition, following the success of our previous Medscape CME courses, which engaged over 37,000 clinicians, in early April, we were excited to launch two new CME modules through Medscape that build on the prior program.

Steve: To address this gap in awareness in Q1, we hosted over 40 peer to peer events engaging and educating providers in the community who manage COPD patients about the selection criteria and benefits of Zephyr valves. In addition, following the success of our previous med scape CME courses, which engaged over 37000 clinicians and.

Steve: Early April we were excited to launch two new <unk> modules for Medicaid that build on the prior programs.

Steve: While virtual education as a cost effective means of reaching a large audience often in person education of the highest potential clinicians can help drive engagement and interaction as our sales team has successfully established a footprint of treating centers across the globe. We're now beginning to pilot cost efficient programs to engage larger numbers of high potential COPD clinicians and our.

Steven Williamson: While virtual education is a cost-effective means of reaching a large audience, often in-person education of the highest potential clinicians can help drive engagement and action. As our sales team has successfully established a footprint of treating centers across the globe, we're now beginning to pilot cost-efficient programs to engage larger numbers of high-potential COPD clinicians in our most developed market. This year, we're expanding our field presence by hiring therapy awareness specialists dedicated to community physician education, who we expect to increase referrals for valve treatment. We've hired and trained our first seven target geographies in the U.S., and we anticipate they'll begin to make an impact starting in the second half of the year.

Steve: Most developed markets.

Steve: This year, we're expanding our field presence by hiring therapy awareness specialists dedicated to community physician education, we expect to increase referrals for valve treatment.

Steve: Hired and trained our first seven target geographies in the U S and we anticipate they will begin to make an impact starting in the second half of the year.

Steve: What are the dynamics. We've also identified through our research is the clinicians less familiar with valves may be reluctant to refer unless prompted by the patient for that patient may not qualify and be disappointed.

Steven Williamson: One of the dynamics we've also identified through our research is that clinicians less familiar with valves may be reluctant to refer unless prompted by the patient, for fear the patient may not qualify and be disappointed. For that reason, we've seen benefits to educating patients to be their own advocates and encourage their physicians to explain their full range of options. In Q1, we continued to refine our direct-to-patient targeting and education, and we saw a record number of unique patient engagements driven by these DTP initiatives. As a result of these efforts, we are confident we are on track to meet the patient education goals communicated on our last call.

Steve: For that reason, we've seen benefits to educating patients to be their own advocates and encourage their physicians to explain their full range of options. In Q1, we continued to refine our direct to patient targeting in education, and we saw a record number of unique patient engagement is driven by these TTP initiatives as a result of these efforts. We are confident we are on track.

Steve: Meet the patient education goals communicated on our last call.

Steve: In addition to our work on education and engagement of providers. We are increasingly encouraged by our customers progress in identifying patients who may qualify for valves, who are already under management in their facilities for other medical conditions, our long track detect system prospectively analyze the C T scans and hospital Pacs systems to identify.

Steven Williamson: In addition to our work on education and engagement of providers, we are increasingly encouraged by our customers' progress in identifying patients who may qualify for valves who are already under management in their facilities for other medical conditions. Our Lung Tract Detect System prospectively analyzes CT scans and hospital PAC systems to identify patients with radiographic emphysema and seamlessly integrates them into a simple workflow for further evaluation. We are encouraged by the early results of our first handful of active centers, where lung tract detect customers are seeing an average rate of emphysema detection of approximately 15%, consistent with previously published data.

Steve: Patients with radiographic emphysema and seamlessly integrate them into a simple workflow for further evaluation.

Steve: We are encouraged by the early results of our first handful of active centers, where long track to protect customers are seeing an average rate of emphysema detection of approximately 15% consistent with previously published data. We're also seeing a significant increase in number of patients entering work up in our pilot sites. Most importantly, clinicians seem to grasp the benefits of shifting.

Steven Williamson: We're also seeing a significant increase in the number of patients entering workup in our pilot sites. Most importantly, clinicians seem to grasp the benefits of shifting from lung cancer screening to a more comprehensive lung health screening approach. I'm pleased with the number of customers entering the contracting phase, and we expect to see more hospitals activating lung tracts to detect throughout the year.

Steve: From lung cancer screening to a more comprehensive lung health screening approach I am pleased with the number of customers entering the contracting phase and we expect to see more hospitals activating <unk> detect throughout the year.

Steve: Now shifting to the second leg of our strategy. The test phase focuses on relieving what can be a bottleneck to care coordination and patient workflow and helping scale high volume treatment centers. One key element to this is gaining hospital administrative support a concept that is increasingly resonating with hospital executives is the value of building.

Steven Williamson: Now, shifting to the second leg of our strategy, the test phase focuses on relieving what can be a bottleneck to care, the coordination of patient workflow, and helping scale high-volume treatment. One key element to this is gaining hospital administrative support, the concept that is increasingly resonating with hospital executives is the value of building and scaling comprehensive lung health programs, which offer broad benefits compared to siloed disease specific programs for lung cancer, lung transplantation, or COPD. For example, many hospitals today offer cancer screening, but these programs are often not set up to trigger action on other serious conditions found by the screening, such as emphysema.

Steve: And scaling comprehensive lung health programs, which offer broad benefits compared to siloed disease specific programs for lung cancer lung transplantation or COPD. For example, many hospitals today offer cancer screening, but these programs are often not setup to trigger action on other serious conditions found by the screening such as emphysema.

Steve: Leading hospitals are now establishing lung health programs that have care coordination and clinical pathways designed to support holistic patient care.

Steven Williamson: Leading hospitals are now establishing lung health programs that have care coordination and clinical pathways designed to support holistic patient care. These hospitals recognize that by investing in pulmonary patient care, they can attract many new patients into their healthcare system and optimize the care of patients they already see. By being proactive, these hospitals are improving the health of communities they serve, increasing reimbursement for their system, and reducing mortality from lung disease. We have found that the most successful centers have dedicated support staff, including clinical navigators, who enhance workflow efficiency by guiding patients through the testing process.

Steve: These hospitals recognize that by investing in pulmonary patient care. They can attract many new patients into their health care system and optimize the care of patients they already see by being proactive. These hospitals are improving the health of communities they serve increasing reimbursement for their system and reducing mortality from lung disease.

Speaker Change: We have found that the most successful centers have dedicated support staff, including clinical navigators, who enhanced workflow efficiency by guiding patients through the testing process. However, some institutions hesitate to add additional head count to address this we're marketing a new program that offers our hospitals are third party technology enabled solution to virtually.

Steven Williamson: However, some institutions hesitate to add additional. To address this, we're marketing a new program that offers our hospitals a third-party, technology-enabled solution to virtually manage patients through the hospital's workflow process. Early feedback from the first customer has been that the service efficiently streamlines the process of qualifying patients from lung tracts to tech and scheduling them for workup. We believe this third-party service is an efficient solution for hospitals to scale workup without adding internal headcount. Although we are in an early phase, we're encouraged by our results thus far and have begun targeted marketing of this program to long track to protect customers and customers with internal resource constraints.

Steve: Manage patients through the hospitals workflow process.

Steve: Early feedback from the first customer has been that the service efficiently streamlines the process of qualifying patients from lung tracts detect and scheduling them for work.

Steve: We believe this third party services and efficient solution for hospitals to scale work up without adding internal head count.

Steve: Although we are in an early phase we're encouraged by our results thus far and it begun targeted marketing of this program to lung tracks, the tech customers and customers with internal resource constraints.

Steve: Yeah.

Steven Williamson: Another way to expand test capacity is to expand the number of center screening patients. In Q1, we also added 10 new U.S. accounts, ending the quarter with 285 active. We define active accounts as centers that have placed a revenue-generating order in the quarter. Looking ahead, we'll continue to add new high-potential accounts opportunistically.

Another way to expand test capacity is to expand the number of centers screening patients. In Q1. We also added 10, new U S accounts ending the quarter with 285 active accounts, we define active accounts at centers that are placed a revenue generating order in the quarter. Looking ahead, we will continue to add new high potential accounts opportunistically.

Steven Williamson: Turning to the third and final leg of our strategy, focused on TREAT, we're increasing our global footprint and seeking to expand indications to fuel our long-term growth potential. In Q1, we delivered strong international year-over-year revenue growth of 39 percent, marking a material acceleration as we anticipated. Results were driven by continued strength in China and growth in select international markets. In Europe, we continue to deploy proven sales tools we utilize in the U.S. for use in local geographies. This includes operational best practice sharing, community physician engagement, virtual case discussions with experts, and peer-to-peer education programs. Furthermore, we're exploring a variety of targeted approaches to increase severe emphysema screening in existing accounts looking to develop their case volumes further, such as review of pulmonary function test results and lung cancer screening test results for patients with high levels of trapped air or emphysema dyspraxia.

Steve: Turning to the third and final leg of our strategy focused on treat we're increasing our global footprint and seeking to expand indications to fuel our long term growth potential in Q1, we delivered strong international year over year revenue growth of 39%, marking a material acceleration as we anticipated results were driven by continued strength in China and <unk>.

Steve: And select international markets.

Steve: In Europe, we continue to deploy proven sales tools, we utilize in the U S for use in local geographies. This includes operational best practice sharing community physician engagement virtual case discussions with experts and peer to peer education programs.

Steve: Furthermore, we're exploring a variety of targeted approaches to increase severe emphysema screening and existing accounts looking to develop their case volumes further such as review of pulmonary function test results in lung cancer screening test results for patients with high levels of trapped there or emphysema disruption.

Steven Williamson: We anticipate the impact of our international efforts to continue to drive revenue growth in the near term, particularly through the first half of 2020. Outside of Europe, we're making progress on our Japanese Post-Market Surveillance Study, which supports our plans for broader commercialization in approximately 2026. As one of the largest medical device markets in the world, Japan represents a significant opportunity where an estimated 100,000 patients stand to benefit from ZephyrVent. To build awareness of our technology in Japan, we hosted several medical education events during Q1, engaging over 500 COPD-focused physicians as we continue to enroll in our post-approval study and begin to seed the market ahead of commercial launch.

Steve: We anticipate the impact of our international efforts to continue to drive revenue growth in the near term, particularly through the first half of 2025.

Steve: Outside of Europe, we're making progress on our Japanese post market surveillance study, which supports our plans for broader commercialization in approximately 2026 as one of the largest medical device markets in the World, Japan represents a significant opportunity where an estimated 100000 patients stand to benefit from his effort valves to build awareness of our technology in Japan, we hosted several MEH.

Steve: Education events during Q1 engaging over 500, COPD focus physicians as we continue to enroll in our post approval study and begin to seed the market ahead of commercial launch.

Steve: On expanding indications, we continue to increase enrollment and activate centers around the world and our <unk> convert to trial.

Steven Williamson: On expanding indications, we continue to increase enrollment and activate centers around the world in our Arasil Convert2 trial. Once we receive PMA approval, Arasil will allow us to treat emphysema patients with collateral ventilation, which we expect to expand our immediately addressable market of eligible patients by an estimated 20% globally. We continue to anticipate the commercial launch for Arasil outside of the U.S. in approximately 2026 and in the U.S. in approximately 2026.

Steve: Once we receive PMA approval <unk> will allow us to treat emphysema patients with collateral ventilation, which we expect to expand our immediately addressable market of eligible patients by an estimated 20% globally. We continue to anticipate the commercial launch for <unk> outside of the U S and approximately 2026 and in the U S and approximately 2027.

Steve: Overall I am pleased with the progress of our ongoing programs, which have positioned us as a strong partner to our accounts by offering comprehensive solutions across the entire patient care journey.

Steven Williamson: Overall, I am pleased with the progress of our ongoing programs, which have positioned us as a strong partner to our accounts by offering comprehensive solutions across the entire patient care journey. We believe our combined efforts to grow patient volume, increase test efficiency, and expand the ability to treat patients will accelerate penetration of the market opportunity for Zephyr Vals. That said, it will take time to implement these programs across our account base, and it will also take time for new patients to work through the system to treat. While U.S. growth has moderated over the past four quarters, it has sharpened our view of key pressure points in the patient funnel, and we're taking decisive action to unlock the next phase of expansion.

Steve: We believe our combined efforts to grow patient volume increased test efficiency and expand the ability to treat patients will accelerate penetration of the market opportunity for <unk>.

Steve: It will take time to implement these programs across our account base and it will also take time for new patients to work through the system to treatment.

Steve: While U S growth has moderated over the past four quarters. It has sharpened our view of key pressure points in the patient funnel and we're taking decisive action to unlock the next phase of expansion early results from targeted initiatives are encouraging and we believe they will set the foundation for accelerated U S growth in the back half of the year.

Steven Williamson: Early results from targeted initiatives are encouraging, and we believe they will set the foundation for accelerated U.S. growth in the back half of the year. The question we consistently pressure test when assessing U.S. opportunity is the total addressable market, or TAM. Are there truly 500,000 patients with severe emphysema who can benefit from valves? Based on the engagement and volume we see through our directed patient programs, we believe the answer is unequivocally yes. Every day, physicians hear from patients across the country who are severely debilitated, out of options, and unaware that treatment is available. The unmet need is large and it is urgent.

Steve: The question, we consistently pressure test when assessing U S opportunity is the total addressable market or Tam.

Steve: Are there truly 500000 patients with severe emphysema, who can benefit from valves.

Steve: On the engagement in volume, we see through our direct to patient programs. We believe the answer is unequivocally, yes everyday physicians here from patients across the country, who are severely debilitated out of options and unaware that treatment is available.

Steve: Met need is large and it is urgent.

Steven Williamson: Today, we have hundreds of customer sites covering major metropolitan areas. The infrastructure is in place. The challenge lies in better connecting these patients to the physicians who can treat them. As I mentioned before, our data shows that fewer than a third of community pulmonologists are actively referring patients for BLVR and typically only after all other options have failed. This gap in awareness is something we are actively addressing. As I highlighted, we've launched a multi-pronged strategy incorporating therapy awareness specialists, expanded peer-to-peer education efforts, and launched a national CME program through Medscape to drive best practices more broadly.

Steve: Today, we have hundreds of customer sites covering major metropolitan areas. The infrastructure is in place. The challenge lies in better connecting these patients to the physicians, who can treat them as I mentioned before our data shows that fewer than a third of community Pulmonologists are actively referring patients for <unk> and typically only after all other option.

Steve: A sale this gap and awareness is something we are actively addressing.

Steve: As I highlighted we've launched a multi pronged strategy incorporating therapy awareness specialist expanded peer to peer education efforts and launched a national CMV program through med scape to drive best practices more broadly and.

Steven Williamson: In parallel, Lung Tracts Detect is enabling hospitals to proactively identify valve candidates directly from hospital PAC systems, bypassing traditional referral bottlenecks and accelerating patient access to care. Further, we're working to enable greater efficiency, particularly with regard to the speed at which patients move through the workup and treatment process. LungTracks Connect addresses this directly, streamlining everything from CT scan uploads to patient tracking and workflow management. It is becoming a critical tool for patient care coordinators to improve throughput, reduce delays, and enhance the overall patient experience. The patients are there, the programs to treat them exist, and now the focus is connecting the two.

Steve: In parallel lung tracks detect is enabling hospitals to proactively identify valve candidates directly from hospital Pacs systems, bypassing traditional referral bottlenecks and accelerating patient access to care.

Steve: Further we are working to enable greater efficiency, particularly with regard to the speed at which patients move through the workup and treatment process.

Steve: <unk> connect addresses this directly streamlining everything from Cte scan uploads to patient tracking and workflow management. It is becoming a critical tool for patient care coordinators to improve throughput and reduce delays and enhance the overall patient experience.

Steve: The patients are there the programs to treat them exist and now the focus is connecting the two we anticipated. This plateau, we've acted decisively and we've taken actions to stem. What we believe is a temporary slowdown and expect Q1 to represent the low point of U S growth as we anniversary of first half of tough comps and expect to see the impact of these.

Steven Williamson: We anticipated this plateau, we've acted decisively, and we've taken actions to stem what we believe is a temporary slowdown and expect Q1 to represent a low point of U.S. growth as we anniversary a first half of tough comps and expect to see the impact of these initiatives in the second half of the year, positioning us to return to consistent, sustainable, long-term U.S. growth.

Steve: Initiatives in the second half of the year positioning us to return to consistent sustainable long term U S growth.

Steven Williamson: Finally, I'd like to provide an update on the civil investigative demand we received from the U.S. Department of Justice in December of 2022. As a reminder, the original action was filed in connection with a request for information under the False Claims Act and the Anti-Kickback Statute.

Steve: Finally, I'd like to provide an update on the civil investigative demand we received from the U S Department of Justice in December of 2022 as a reminder, the original action was filed in connection with a request for information under the false claims act and the anti kickback statute.

Steven Williamson: I am pleased to report that on March 31st, 2025, we received notice that the DOJ formally declined to intervene in the case. We remain committed to operating with the highest standards of integrity and compliance, and we're pleased to put the CID behind us as we continue to focus on delivering value to patients, providers, and shareholders.

Steve: I am pleased to report that on March 31, 2025, we received notice that the Doj formerly declined to intervene in the case.

Steve: We remain committed to operating with the highest standards of integrity and compliance and we're pleased to put the CIB behind us as we continue to focus on delivering value to patients providers and shareholders.

Steven Williamson: In conclusion, our Q1 performance reinforces our belief that Pulmonx is well-positioned for sustainable growth in the long term, and we are laying the foundation for continued success as we execute on our strategic initiatives.

Speaker Change: In conclusion, our Q1 performance reinforces our belief that <unk> is well positioned for sustainable growth in the long term and we are laying the foundation for continued success as we execute on our strategic initiatives now I will turn the call over to <unk> to provide a more detailed review of our first quarter results.

Mehul Joshi: Now, I'll turn the call over to Mehul to provide a more detailed review of our first quarter results. Thank you, Steve. And good afternoon, everyone. Total worldwide revenue for the three months ended March 31, 2025 was $22.5 million, a 20% increase from $18.9 million in the same period of the prior year, and an increase of 21% on a constant currency basis. Our strong top-line performance underscores the continued execution of our long-term strategy and adoption of Zephyr's vow. U.S. revenue in the first quarter was $14.2 million, an increase of 11% from $12.9 million over the prior year period.

Speaker Change: Thank you, Steve and good afternoon, everyone total worldwide revenue for the three months ended March 31, 2025 was $22 5 million or.

A 20% increase from $18 9 million in the same period of the prior year and an increase of 21% on a constant currency basis.

Speaker Change: Our strong top line performance underscores the continued execution of our long term strategy and adoption of Zephyr valves.

Speaker Change: S revenue in the first quarter was $14 2 million.

Speaker Change: An increase of 11% from $12 9 million over the prior year period.

Mehul Joshi: U.S. growth was generally as expected, particularly when considering the exceptionally challenging prior year comparison, a factor we accounted for in our projection. International revenue in the first quarter of 2025 was $8.3 million, a 39% increase from $6 million during the same period last year, and an increase of 43% on a constant currency basis. Strength in international revenue was particularly pronounced due to stronger-than-expected results in China. We believe this was driven by strong underlying demand for Zephyr valves. coupled with greater-than-expected distributor stocking in response to the evolving trade and regulatory landscape. Our guidance contemplates this to be a driver of international revenue growth in the first half of 2025.

Speaker Change: U S growth was generally as expected, particularly when considering the exceptionally challenging prior year comparison, a factor we accounted for in our projections.

Speaker Change: International revenue in the first quarter of 2025 was $8 3 million.

Speaker Change: A 39% increase from $6 million during the same period last year and an increase of 43% on a constant currency basis strength in international revenue was particularly pronounced due to stronger than expected results in China.

Speaker Change: We believe this was driven by strong underlying demand for is that for valves.

Speaker Change: Coupled with greater than expected distributor stocking in response to the evolving trade and regulatory landscape.

Speaker Change: Our guidance contemplates this to be a driver of international revenue growth in the first half of 2025.

Speaker Change: Gross margin for the first quarter of 2025 was 73% compared to 75% in the prior year period.

Mehul Joshi: Gross margin for the first quarter of 2025 was 73% compared to 75% in the prior year period. This gross margin is a direct result of robust international growth, which shifted our geographic revenue mix as anticipated. Importantly, this result is consistent with our expectations for the full year.

Speaker Change: This gross margin is a direct result of robust international growth, which shifted our geographic revenue mix as anticipated.

Speaker Change: Importantly, this result is consistent with our expectations for the full year.

Speaker Change: Total operating expenses for the first quarter of 2025 were $39 million.

Mehul Joshi: Total operating expenses for the first quarter of 2025 were $30.9 million, an 8% increase from $28.6 million in the first quarter of 2024. Non-cash stock-based compensation expense was $5.6 million in the first quarter of 2025. Excluding stock-based compensation expense, total operating expenses in the first quarter of 2025 increased 10% from the same period of the prior year. Consistent with our commitment to discipline, investment, and cost optimization while scaling the business. R&D expenses for the first quarter of 2025 were $4.8 million, compared to $4.2 million in the same period of the prior year. The increase was primarily driven by higher clinical expenses as enrollment in our clinical trials accelerated.

Speaker Change: 8% increase from $28 6 million in the first quarter of 2024.

Speaker Change: Noncash stock based compensation expense was $5 6 million in the first quarter of 2025, excluding stock based compensation expense total operating expenses in the first quarter of 2025 increased 10% from the same period of the prior year consistent with our commitment to disciplined investment and.

Speaker Change: Cost optimization, while scaling the business.

Speaker Change: R&D expenses for the first quarter of 2025 or $4 8 million compared.

Speaker Change: Compared to $4 2 million in the same period of the prior year. The increase was primarily driven by higher clinical expenses as enrollment in our clinical trials accelerates.

Speaker Change: Sales general and administrative expenses for the first quarter of 2025 or $26 1 million compared.

Mehul Joshi: sales, general, and administrative expenses for the first quarter of 2025 were $26.1 million, compared to $24.4 million in the first quarter of 2024. The increase was driven by expanded commercial investments, including direct-to-patient initiatives and programs to enhance clinician therapy awareness. Net loss for the first quarter of 2025 was $14.4 million or a loss of $0.36 per share as compared to a net loss of $13.7 million or a loss of $0.36 per share for the same period of the prior year. An average weighted share count of 40 million shares was used to determine loss per share for the first quarter 2025.

Speaker Change: Compared to $24 4 million in the first quarter of 2024.

Speaker Change: The increase was driven by expanded commercial investments, including direct to patient initiatives and programs to enhance clinician therapy awareness.

Speaker Change: Net loss for the first quarter of 2025 was $14 4 million or a loss of <unk> 36 per share as compared to a net loss of $13 7 million or a loss of <unk> 36 per share for the same period of the prior year and average weighted share count of 40 million shares was used to determine loss per share for the first quarter 2020.

Speaker Change: Five.

Mehul Joshi: adjusted EBITDA loss for the first quarter of 2025 was $8.5 million, as compared to $8 million in the first quarter of 2024. We ended March 31, 2025, with $88.7 million in cash, cash equivalents, and marketable securities, a decrease of $12.8 million from December 31, 2024. As a reminder, the first quarter is historically our most cash-intensive quarter, primarily due to the timing of annual bonus payments. We remain well capitalized to achieve our near and long-term objectives. Our current liquidity, combined with consistent top-line growth and expanding operating leverage, support our confidence in achieving cash flow break-even with the resources currently on hand.

Speaker Change: Adjusted EBITDA loss for the first quarter of 2025 was $8 5 million as compared to $8 million in the first quarter of 2024.

Speaker Change: We ended March 31, 2025, with $88 7 million in cash cash equivalents and marketable securities a decrease of $12 8 million from December 31 2024.

Speaker Change: As a reminder, the first quarter is historically, our most cash intensive quarter, primarily due to the timing of annual bonus payments.

Speaker Change: We remain well capitalized to achieve our near and long term objectives. Our current liquidity combined with consistent top line growth and expanding operating leverage support our confidence in achieving cash flow breakeven with the resources currently on hand.

Speaker Change: To further enhance balance sheet flexibility in April 2025, we successfully extended the interest only period on our $37 million term loan by an additional three years. The interest only payment period will now run through the remaining loan period with a full principal payment due in October 2027.

Mehul Joshi: To further enhance balance sheet flexibility, in April 2025, we successfully extended the interest-only period on our $37 million term loan by an additional two years. The interest-only payment period will now run through the remaining loan period with a full principal payment due in October 2027.

Speaker Change: Turning to guidance, we are reaffirming our full year 2025 guidance for revenue gross margin and operating expenses.

Mehul Joshi: Turning to Guidance. we are reaffirming our full year 2025 guidance for revenue, gross margin, and operating expenses. We continue to expect full year 2025 reported revenue to be in the range of $96 million to $98 million, anticipating growth generally in line with our prior expectations. while our revenue guidance incorporates current full-year foreign exchange rate projections. Future fluctuations in global currency markets could affect reported revenue growth.

Speaker Change: We continue to expect full year 2025 reported revenue to be in the range of 96 million to $98 million.

Speaker Change: Anticipating growth generally in line with our prior expectations.

Speaker Change: While our revenue guidance incorporates current full year foreign exchange rate projections future fluctuations in global currency markets could affect reported revenue growth.

Speaker Change: In the U S. We remain focused on scaling commercial initiatives as highlighted previously by Steve which are expected to drive an acceleration of growth in the second half of 2025 as patient engagement and therapy adoption increases across our key accounts.

Mehul Joshi: In the U.S., we remain focused on scaling commercial initiatives as highlighted previously by Steve, which are expected to drive an acceleration of growth in the second half of 2025 as patient engagement and therapy adoption increases across our key accounts. Internationally, we continue to project solid growth in the second quarter, and thereby the first half of the year, as previously communicated. We anticipate typical seasonality in the latter half of the year as we further strengthen our global footprint and commercial execution.

Speaker Change: Internationally, we continue to project solid growth in the second quarter and thereby the first half of the year as previously communicated we anticipate typical seasonality in the latter half of the year as we further strengthen our global footprint and commercial execution.

Mehul Joshi: We are actively monitoring global trade policies, including tariffs, and assessing the potential impact on international revenue. We expect gross margins for the full year to be approximately 74%, with improvement anticipated in the second half of the year driven by favorable geographic mix, higher production volumes and the continued. impact of cost optimization in this. We manufacture all our products in the United States and rely on a combination of in-house processing and third-party suppliers for raw materials and components. The cost of materials imported to build our products is nominal. And with our current inventory position, we do not expect gross margins to be materially affected by fluctuations in global trade policies in the short term.

Speaker Change: We are actively monitoring global trade policies, including tariffs and assessing the potential impact on international revenue.

Speaker Change: We expect gross margins for the full year to be approximately 74% with improvement at <unk> in the second half of the year driven by favorable geographic mix higher production volumes and the continued.

Speaker Change: Impact of cost optimization initiatives.

Speaker Change: We manufacture all of our products in the United States and rely on a combination of in house processing and third party suppliers for raw materials and components.

Speaker Change: Cost of materials imported to build our product is nominal and with our current inventory position. We do not expect gross margins to be materially affected by fluctuations in global trade policies and the short term.

Speaker Change: Okay.

Mehul Joshi: Full-year operating expenses are projected to be $133 million to $135 million, including approximately $22 million in non-cash, stock-based compensation. This outlook continues to reflect full investment in our Acquire, Test, and Treat strategy, which remains central to our growth and market expansion.

Speaker Change: Full year operating expenses are projected to be $133 million to $135 million, including approximately $22 million in noncash stock based compensation.

Speaker Change: This outlook continues to reflect.

Speaker Change: <unk> investment in our acquired test and treat strategy, which remains central to our growth and market expansion plans.

Mehul Joshi: In closing, we are confident in our trajectory for 2025 and beyond, with strong momentum, robust market expansion initiatives, and continued operational discipline, we are well positioned to drive the next phase of our growth.

Speaker Change: In closing we are confident in our trajectory for 2025 and beyond with strong momentum robust market expansion initiatives and continued operational discipline, we are well positioned to drive the next phase of our growth.

Steven Williamson: With that, I'd like to turn the call back to Steve for his closing remarks. Thanks, Mehul.

Steve: With that I'd like to turn the call back to Steve for his closing remarks.

Steve: Thanks, Michael in summary, we had a strong start to the year marked by robust first quarter growth and continued success in our innovative commercial and clinical programs. Looking ahead, we've got a strong balance sheet and a clear strategy that we believe will support continued future growth at or above 20% over the long term, we remain confident in our opportunity.

Steven Williamson: In summary, we had a strong start to the year marked by robust first quarter growth and continued success in our innovative commercial and clinical programs. Looking ahead, we've got a strong balance sheet and a clear strategy that we believe will support continued future growth at or above 20% over the long term. We remain confident in our opportunity, plans, and team as we build a promising future for patients around the world with severe lung disease.

Steve: <unk> and team as we build a promising future for patients around the world with severe lung disease.

Operator: I'd like to thank you for your attention, and we'll now open up the call for questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again.

Steve: I'd like to thank you for your attention and we'll now open up the call for questions operator.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced and to withdraw. Your question. Please press Star One again. The first question comes from Rick Wise with Stifel. Your line is open.

Rick Wise: The first question comes from Rick Wise with Stiefel. Your line is open.

Andy: Hi, This is Andy on for Rick Thanks for taking our questions.

Annie: Hi, this is Annie on Perrec. I was hoping you could give us some additional color on your guidance outlook. It's nice to see the...

Speaker Change: Was hoping you could give us some additional color on your guidance outlook, it's nice to see the outperformance in the first quarter, but I'm, hoping to better understand your caution about raising guidance given all of these positive.

Elizabeth Sparicio: Elizabeth Sparicio. about raising guidance given all of these positive. initiatives that are underway, and kind of are thinking it might be too early in the year, or are there other reasons that you're thinking about?

Andy: All initiatives that are underway.

Andy: Are you just.

Andy: It might be too early in the year or are there. Other reasons that you are thinking about any color there would be great. Thanks.

Speaker Change: Yes, Annie this is naval Joshi.

Mehul Joshi: Yeah, Annie, this is Mehul Joshi. I don't know if you said raising guidance. We have reiterated 2025 revenue guidance at 96 to 98 million, as we had stated in the Q4 call. And in that we had guided the first half growth to be driven by our international business and the second half growth to be driven by the US business. Q1 mostly materialized as anticipated and the first half is on track. So there has been no change from what we discussed about a quarter ago. And this is, we're also continuing to execute on our U.S. initiatives, which Steve talked about, lung tracks, physician education programs, virtual navigator pilots, DTP, and so on, to help drive the U.S.

Speaker Change: Don't know if you said raising guidance, we have reiterated 2025 revenue guidance at <unk> $96 million to $98 million.

Speaker Change: As we had stated in the Q4 call and in that we had guided to first half growth to be driven by our international business in the second half growth to be driven by the U S business Q.

Speaker Change: Q1, mostly materialized as anticipated and the first half is on track.

Speaker Change: So there has been no change from what we discussed about a quarter ago and this is.

Speaker Change: We're also continuing to execute on our U S initiatives, which Steve talked about lung track physician education programs virtual navigator pilots DTP and so on to help drive the U S growth.

Mehul Joshi: growth. So our guidance stands as is based on, you know, Q1 hitting as we anticipate. Okay, got it. Thank you. And then just one more follow up. Can you kind of help us understand where upside Yeah, I would say, I think the other question you had asked, maybe that I hadn't answered is, why aren't we raising guidance? So, I think, because we hit 21% constant currency growth, and our guidance is 96 to 98, which is, you know, 16 to 18, on a constant currency basis. I think the one thing, you know, as I think everyone is concerned about is the global macroeconomic environment is in flux, and tariffs and effects drive some uncertainty.

Speaker Change: So our guidance stands as is based on.

Speaker Change: Q1, hitting as we anticipated.

Speaker Change: Okay got it. Thank you and then just one more follow up can you kind of help us understand where upside to full year guidance could come from Sierra unfolds. Thanks.

Speaker Change: Thanks.

Speaker Change: Yes, I would say I think the other question you had asked maybe that I hadn't answered is why aren't we raising guidance. So I think.

Speaker Change: Because we had 21% constant currency growth and our guidance is <unk> 96 to 98, which is 16% to 18 on a constant currency basis I think the one thing.

Speaker Change: I think everyone is concerned about is the global macroeconomic environment is influx and tariffs and FX drives some uncertainty so we're kind of watching and waiting on that.

Mehul Joshi: So, we're kind of watching and waiting on that. where Where there is opportunity is adoption of some of our initiatives in the U.S., specifically lung tracks, how we're working to educate COPD prescribing physicians and our DTP program. So as those investments take hold and we make progress on those initiatives, that could be upside for Pulmonx in the second half of the year.

Speaker Change: Where.

Speaker Change: Where there is opportunity as adoption of some of our initiatives in the U S. Specifically lung tracks, how we're working to educate COPD prescribing physicians.

Speaker Change: Our DTP program, so as as those investments take hold and we made progress on those initiatives that could be upside for us.

Speaker Change: <unk> in the second half of the year.

Steven Williamson: Yeah, Annie, I'll just add on to that. So if you look at the DTP metrics that we have, they're actually doing very well. We see a large number of patients, our first time patients that are coming into our website and either taking a quiz, or calling into our helpline and becoming educated on the product. Those numbers continue to grow quarter over quarter. We also have a strong foundation of treatment centers that are set up across the United States. And the connection between those two is really what we're focused on. We've got a number of different initiatives, these therapy awareness specialists that I talked about, we've got seven of them that'll be, actually they just joined and they've been trained.

Speaker Change: Yeah, Andy I'll, just add onto that so if you look at the DTP metrics that we have they are actually doing what very well, we see a large number of patients are first time patients that are coming into our website and either taking a quiz or calling into our helpline and.

Speaker Change: And becoming educated on the product.

Speaker Change: There is those numbers continue to grow quarter over quarter. We also have a strong foundation of.

Treatment centers that are set up across the United States and the connection between those two is really what we're focused on we've got a number of different initiatives. These therapy awareness specialists that I talked about we've got seven of them have that'll be actually they just joined and they've been trained.

Annie: So if we start to see a big pickup there, and that coupled with what we're seeing with lung tracts detect, and as we go through the contracting process with that with some of these larger hospital systems, those would be potential tailwinds for the back half of the year. That's really helpful, Cutler. Thank you. Yep.

Speaker Change: So if we start to see a big pickup there.

Speaker Change: That coupled with what we're seeing with lung tracts detect and as we go through the contracting process with that with some of these larger hospital systems those would be potential tailwind for the back half of the year.

Speaker Change: Great. That's really helpful color. Thank you.

Speaker Change: Yep.

Speaker Change: Okay.

Frank Takkinen: And the next question will come from Frank Takkinen with Lake Street Capital Markets. Your line is open. All right, thanks for taking the questions. Congrats on the solid start to the year.

Speaker Change: And the next question will come from Frank <unk> with Lake Street Capital markets. Your line is open.

Speaker Change: Alright, Thanks for taking my questions. Congrats on the solid start to the year.

Steven Williamson: I wanted to start with maybe kind of boiling down the Acquire, Test, Treat strategy you're implementing, Steve. I know there's a number of initiatives that you're putting in place at once, and I'm sure there's some early learning. So that's what I wanted to ask about. Which of the programs do you think have been most impactful in the early days? And which of these do you think are really going to get at the bottlenecks that you referenced earlier in the quarter, earlier in the? Yeah, our marketing and peer to peer education have really been highlights for us.

Speaker Change: Wanted to start with you maybe kind of boiling down the acquirer test Street strategy, you're implementing Steve I know theres, a number of initiatives that youre, putting in place like one at once and I am sure. There is some early learnings. So that's what I wanted to ask about what which of the programs do you think have been most impactful in the early days and which of these do you think are really going to get at.

Speaker Change: The bottlenecks that you referenced earlier in the quarter earlier in the remarks.

Speaker Change: Our marketing and peer to peer education have really been highlights for us we see very very good response from the physicians that attend our peer to peer events. We also do a clinical excellent summit, which we bring in some of the smaller facilities or are new programs to talk with some of the facilities that are that have built out big programs I think those are.

Steven Williamson: We see very, very good response from the physicians that attend our peer to peer events. We also do a clinical excellence summit, which we we bring in some of the smaller facilities or our new programs to talk with some of the facilities that are that have built out big programs. I think those are those have been early success stories for us. The next phase of that is really getting after these these community physicians with the therapy awareness reps. That's going to be a good indicator for us as they get out there and we can start educating these doctors.

Speaker Change: Those have been early success stories for us the next phase of that is really getting after these these.

Speaker Change: Community physicians with the therapy awareness reps.

Speaker Change: That's going to be.

Speaker Change: Good indicator for us as they get out there and we can start educating these doctors and hopefully we'll be able to move that needle on the percent of these doctors that are actually sending patients into <unk>. So thats. One secondly, I would say long tracks, we really have seen a positive momentum the sales forces out there there are.

Steven Williamson: And hopefully we'll be able to move that needle on the the percent of these doctors that are actually sending patients into treaters. So that's one. Secondly, I would say lung tracks, we really have seen a positive momentum. The Salesforce is out there, they're aggressively promoting it. We're seeing great traction. We've got dozens of accounts that have actually begun. They're in various phases of the contracting stage right now. And so I think that would be really a that's a that's a big, big potential growth driver for us in the future.

Speaker Change: Aggressively promoting it we're seeing great traction we've got dozens of accounts that have actually begun they're in various phases of the contracting stage right now.

Speaker Change: And so I think that would be really.

Speaker Change: Big Big.

Speaker Change: Potential growth driver for us in the future.

Speaker Change: Okay, sorry, one clarifier and sorry, if I missed it did you disclose how many lung tracks accounts are active today.

Frank Takkinen: Okay, sorry, one clarifying, sorry if I missed it.

Frank Takkinen: Did you disclose how many LungTracks accounts are active?

Speaker Change: We're really early in the process Frank So we haven't disclosed that I will say that we've got dozens.

Steven Williamson: You know, we're really early in the process, Frank, so we haven't disclosed that. I will say that we've got dozens, several dozen contracts that are currently going through process. So as you may or may well not know, in late January, we trained our sales force on this. They got out, started rolling it out to their customers in kind of the February and March timeframe. So once they do that, we begin security reviews and contracting. And so those take a little bit of time to get through the hospitals. And so I would say the traction that we're getting as we get into this contracting phase is something that I feel good about.

Speaker Change: Several dozen.

Speaker Change: Contracts that are that are currently going through process. So as you may or may walnut no and les.

Speaker Change: Late January we trained our sales force on this they got out started rolling it out to their customers and kind of the February and March timeframe. So once they do that we began security reviews and contracting and so those take a little bit of time to get through the hospitals and so I would say the traction that we're getting as we get into this contracting phase is.

Speaker Change: Something that I feel good about I think we are.

Frank Takkinen: I think we're seeing a willingness of customers to adopt this technology to identify patients passively that are already in their system. got a couple.

Speaker Change: Where we're seeing willingness of customers to adopt this technology to identify patients, possibly that are already in their system.

Speaker Change: Got it that's helpful and then just last one.

Mehul Joshi: And then just last one. I know it's a fluid environment. But what have you been hearing from some of your international partners as it relates to some of the tariff commentary? Have any of them changed ordering patterns? given you any inclination to think that they may change ordering patterns, any color related to the tariffs in your international market?

Speaker Change: It's a fluid environment, but.

Speaker Change: What have you been hearing from some of your international partners as it relates to some of the tariff commentary any of them changed ordering patterns there.

Speaker Change: Given you any inclination to think that they may change ordering patterns.

Speaker Change: Color related to the tariffs and your international market would be helpful.

Frank: Yes, Hey, Frank because it may hold so we haven't heard.

Mehul Joshi: Yeah, hey, Frank, this is Mehul. So we haven't heard too much from most of our international partners and our direct businesses. But, you know, per our prepared remarks, We have strengthened international revenue that was pronounced by stronger results in China and, as I had indicated, we believe that strong demand was really driven by underlying demand for Zephyr valves, but also there was greater than expected stocking by the distributor in response to these evolving macroeconomic things that are going on. Other than that, we haven't really heard too much. I think everyone's kind of still in the wait and see mode.

Frank: Too much from most of our international.

Frank: Partners in our direct businesses, but part of our prepared remarks.

Frank: Strength in international revenue that was.

Frank: Pronounced by stronger results in China and.

Frank: As I had indicated that we believe that.

Frank: Strong demand was really driven by underlying demand for zephyr.

Frank: For valves, but also there was greater than expected stocking by the distributor in response to these evolving macroeconomic.

Frank: Things that are going on so.

Frank: Other than that we haven't really heard too much I think.

Frank: Everyone's kind of still in the wait and see mode.

Frank: Okay, I'll add onto that Frank if I can quickly so.

Steven Williamson: Okay, I'll add on to that, Frank, if I can quickly. So, you know, in Europe, we haven't really seen much, as Mehul said, I don't know that we've seen really anything. What we have seen is obviously in China, there's a lot of back and forth there. However, that's something that's been contemplated in our 25 guidance. We realized that there would be some first half buying from our Chinese distributors. And so we're seeing that play out as we had originally expected. Got it. That's helpful. Thanks.

May: In Europe, we haven't we haven't really seen much as May all said I don't know that we've seen really anything what.

Speaker Change: What we have seen is obviously in China. There is a lot of back and forth. There. However, thats something thats been contemplated in our 25 guidance.

Speaker Change: We realize that there would be some some first half buying from our Chinese distributors and so we're seeing that play out as we had originally expected.

Speaker Change: Got it that's helpful. Thanks.

Speaker Change: Okay.

John Young: And the next question comes from John Young with Canaccord. Your line is open. I'd say Mehul, thanks for taking our questions tonight. I want to also focus maybe a bit on China. You know, anyway, just help us think about how much China is today of all US sales and any metrics you're willing to share to on the amount of stocking or pull forward you saw on Q1. And also, do you expect continued China orders?

John Young: And the next question comes from John Young with Canaccord. Your line is open.

Speaker Change: Thanks for taking our questions Tonight.

John Young: I want to also focus maybe bid on China.

Speaker Change: Any way you can help us think about.

John Young: How much China is today.

Speaker Change: Sales and any metrics you're willing to share to you.

Speaker Change: Amount of stocking or pull forward you saw in Q1.

Speaker Change: And also do you expect.

Speaker Change: Continued China orders in Q2.

John Young: Yes, Hey, John Thanks for the question. So we did.

Mehul Joshi: Yeah, hey, John, thanks for the question. So we did As indicated, there was some strong buying. We believe our distributor bought ahead of some of the macro environment changes that are happening. There's likely, we don't know exactly, there's pretty strong demand in China. They've opened up 12 regions. There's approximately 20 sales reps that they have out there. So there's a lot of robust selling, and we think the distributor bought maybe a quarter's worth of inventory in the first quarter. But we do expect continued purchasing in the second quarter from the distributor.

John Young: As indicated there was there were some strong buying we believe.

John Young: Our distributor bought ahead of some of the macro.

John Young: And then to changes that are happening.

John Young: There is likely.

John Young: We don't know exactly there is there is pretty strong demand in China, they've opened up 12 region. There is.

John Young: Approximately 20 sales reps that they have out there. So there's a lot of robust selling and and we think the.

John Young: The distributor bought maybe a quarter's worth of inventory.

John Young: And in the first quarter, so, but we do expect continued purchasing in the second quarter from the distributor.

John Young: And then just as a follow up to that.

Mehul Joshi: And then just as a follow up to that, has the reciprocal tariffs been factored into that Q2 buying at this point? And how have you factored that into the 2025 guide? Yeah, I mean, We've we haven't really reflected any potential impact of future tariffs on or trade policy changes, you know, that will affect global macroeconomic environment, right? But we do expect the distributor to buy in Q2 and won't get into how and when and how much, but yeah, we do have that expectation.

Cyclical tariffs.

John Young: Factored into that Q2 buying.

John Young: At this point and how have you factored that into the 2025 guidance.

John Young: Yes, I mean.

We haven't really.

John Young: Reflected any potential impact of future tariffs on order or trade policy changes that.

John Young: That will affect the global macroeconomic environment right.

John Young: But we do expect the distributor to buy in Q2 and.

John Young: We won't get into how and when and how much but yes, we do have that expectation. The other question. You had asked is can we break it out we don't as you know we don't break out revenue by international market, but we do report.

John Young: The other question you had asked is, can we break it out? We don't, as you know, we don't break out revenue by international market, but we do report. in our queue in the segment information note kind of the regional breakout. So you'll be able to see that very shortly. Okay, thank you.

John Young: In our Q in.

John Young: In the segment information know kind of the regional breakout so youll be able to see that very shortly.

John Young: Okay. Thank you so much.

Joanne Wuensch: And our next question comes from Joanne Wuensch with Citi. Your line is open.

Joanne Wuensch: And our next question comes from Joanne Wuensch with Citi. Your line is open.

John Murray: Hi, It's John Murray on for Joanne. Thank you for the question.

Jane Marie: Hi, it's Jane Marie on for Joanne. Thank you for the question. How are you balancing SG&A leverage with your treatment center expansions, physician training, and all those different program implementations associated with building awareness? Yeah, thanks for the question. We are really focused on operating leverage. It's one of our key strategic initiatives. And we're mostly investing in initiatives that drive revenue and future revenue. So we are balancing leverage with investment. But our goal is to grow revenues, as Steve cited in his remarks. And so we're really focused on driving revenue growth with the investment that we have on hand.

John Murray: How are you balancing SG&A line furnished with your treatment center expansion physician training and all those different program implementations associated with building awareness.

Speaker Change: Yes, thanks for the question.

John Murray: We are.

John Murray: Really focused on operating leverage it is one of our key strategic initiatives and where.

John Murray: Mostly investing in initiatives that drive revenue and future revenue.

Speaker Change: So we are balancing leverage with investment, but our goal is to grow revenues at Steve cited in his remarks.

Speaker Change: And so we're really focused on driving revenue growth with the investment that we have on hand now in Q1.

Mehul Joshi: Now, in Q1, Our leverage was not as high because our gross margins were lower as a result of the geographic mix. But as we get into the second through fourth quarters, we'll continue to drive leverage in our P&L.

Speaker Change: <unk>.

Speaker Change: Our leverage was not as high because our gross margins were lower as a result of the geographic mix, but as we get in to the second through fourth quarters, We will continue to drive leverage in our P&L.

Speaker Change: Cool.

Mehul Joshi: Cool.

Mehul Joshi: And as a follow-up, it also sounds like your R&D will continue to grow for now, given all your trials and other innovations up ahead. When do you see it moderating or at least start to leverage as well? Well... Clinical trial expenses, you know, are always consistent with enrollment. So, as enrollment increases, our R&D expenses will continue to go up. And as we roll through 25 into 26 and, you know, complete enrollment, we'll see R&D expenses go up. But once enrollment is complete, they'll start to trail down thereafter.

Speaker Change: As a follow up but also it sounds like your R&D will continue to go for now given all your trial and other innovations.

Speaker Change: When do you see it moderating rallies stocks of leverage as well.

Speaker Change: Well.

Speaker Change: Clinical trial expenses.

Speaker Change: Are always consistent with enrollment so as enrollment increases our R&D expenses will continue to go go up and as we roll through 'twenty five 'twenty six.

Speaker Change: Complete enrollment, we'll see R&D expenses go up but once enrollment is complete.

Speaker Change: They will start to trail down thereafter.

Speaker Change: Okay.

Speaker Change: Okay. Thank you. Thank you so much that's really helpful.

Mehul Joshi: Okay, thank you. Thank you so much.

Operator: That was really As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced and then next question comes from Joseph <unk> with Piper Sandler Your line is open.

Joseph Downing: And the next question comes from Joseph Downing with Piper Sandler. Your line is open. Hey guys, thanks for taking the question. Yes, the US revenues came in a bit light versus our model. Curious, did you lose out on US procedures due to weather dynamics or the tough flu season? And would you expect US volumes to accelerate? Or should we be thinking about the 1Q growth rate and geographic mix there is the right I didn't we didn't see a whole lot coming from weather or flu season. We actually I think one of the things that we were up against was a really tough comp.

Joseph: Hey, guys. Thanks for taking the question.

Speaker Change: Yes, So U S revenues came in a bit light versus our model curious.

Speaker Change: Lose out on U S procedures due to weather dynamics or the tough flu season.

Speaker Change: Would you expect U S volumes are accelerating or should we be thinking about the <unk> growth rate in geographic mix. There is the right go forward figures.

Speaker Change: Yes.

Speaker Change: I didn't we didn't see a whole lot coming from weather or flu season.

Speaker Change: We actually I think one of the things that we were up against a really tough comp.

Steven Williamson: We continue to see growth in our largest hospital systems. We're building the programs. We've talked about these comprehensive lung care programs, lung health programs, and those are starting to gain some traction with with some of our larger accounts. And the concept there being that they have these patients coming in right now for cancer screening or nodule detection or nodule biopsy and the ability to start to capture the 15 percent of those patients that are receiving CT scans that do have radiographic emphysema and work them through to get them proper treatment is very encouraging for some of these hospital administrators.

Speaker Change: We continue to see growth in our largest hospital systems were.

Speaker Change: We're building the programs we've talked about these comprehensive lung care programs lung health programs and.

Speaker Change: And those are starting to gain some traction with some of our larger accounts and the concept there being that they have these patients coming in right now for cancer screening or nodule detection or nodule biopsy and the ability to start to capture the 15% of those patients that are receiving <unk>.

Speaker Change: They do have radiographic emphysema and work them through to get them proper.

Speaker Change: Proper treatment is very <unk>.

Speaker Change: Encouraging for some of these hospital administrators, so I would say that the comp was probably what made the U S growth seem a little bit lower than expected, but at the same time I think if you look at the initiatives that we're focused on right now across the board, they're really focused in these areas are connecting.

Steven Williamson: So I would say that the comp was probably what made the U.S. growth seem a little bit lower than than expected. But at the same time, I think if you look at the initiatives that we're focused on right now across the board, they're really focused in these areas of connecting the patients that we've been able to identify from direct to patient advertising with these treating centers who are ready to take these patients and move forward.

Speaker Change: The patients that we've been able to identify from direct to patient advertising with these treating centers, who are ready to take these patients and move forward.

Speaker Change: Great I appreciate that and then just one more regarding the therapy awareness special it seems like Youre still in the early days here.

Steven Williamson: Great, I appreciate that. And then just one more regarding the therapy awareness specialist. Seems like you're still in the early days here. So still a little bit more development to be to be had there. But do you expect maybe by the end of the year to expand past these seven charts where you're already in or is it too early? Yeah, I hope so. Because if we do, that means that it's really working well. Our goal was to put these in areas where we know that we've got strong sites that are able and willing and actually have a desire to grow.

Speaker Change: Just a little bit more development to be to be had there but.

Speaker Change: Do you expect maybe by the end of the year to expand pass through <unk> or is it too early to say.

Speaker Change: Yes.

Speaker Change: I hope so because if we do that means that it's really working well our goal was to put these in areas, where we know that we've got strong sites.

Speaker Change: Are able and willing and actually have a desire to grow we want to make sure that we are educating the referring physicians in the communities there.

Steven Williamson: We want to make sure that we are educating the referring physicians in the communities there of this treatment. And so we'll look at metrics as they come on board to gauge their effectiveness. And if we see that they're effective, we would put more of them in. It's a low-cost resource for us. And theoretically, the benefit should outweigh the cost by far.

Speaker Change: This treatment and so we will look at metrics as they come onboard to gauge their effectiveness and if we see that they are effective we would put more of them in it as a low cost resource for us.

Speaker Change: And <unk>.

Speaker Change: Theoretically the benefit should should outweigh the cost by far.

Okay.

Speaker Change: Thank you I appreciate it.

Joseph Downing: Thank you. I appreciate it.

Speaker Change: I show no further questions at this time I would now like to turn the call back over to Steve for closing remarks.

Operator: I show no further questions at this time.

Steven Williamson: I would now like to turn the call back over to Steve for closing remarks.

Steven Williamson: Well, thank you, everybody, for joining us today. To conclude, I want to take a moment to thank our Pulmonx employees worldwide for their continued dedication. They're out there fighting every day for every breath so our patients don't have to. And for that, I'm very thankful.

Steve: Well. Thank you everybody for joining us today to conclude I want to take a moment to thank our <unk> employees worldwide for their continued dedication. They are out there fighting everyday for every breath. So our patients don't have to and for that I'm very thankful. So thank you all for your time and have a great week.

Operator: So thank you all for your time and have a great week.

Steve: This concludes today's conference call. Thank you for participating you may now disconnect.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Steve: Okay.

Steve: Okay.

Steve: Hum.

Steve: Yes.

Steve: Okay.

Steve: Okay.

Steve: Okay.

Steve: Okay.

Steve: Okay.

Steve: Yes.

Steve: Yes.

Steve: Yes.

Steve: Yes.

Steve: Okay.

Steve: [music].

Steve: [music].